The US Financial Crimes Enforcement Network (FinCEN) ruled that companies using blockchain to transfer precious metals are money transmitters. This came in response to an inquiry from a company which issues digital proofs of custody through the bitcoin blockchain to transfer ownership of gold, silver, and the like.
Prior to this ruling, companies that use blockchain to transfer precious metal ownership simply fell under the category of a dealer in precious metals, precious stones, or jewels. Now, FinCEN has clarified that they are also money transmitters, which means that the regulations in both these industries apply.
Blockchain and Gold
One of the frequently used applications of blockchain is to track ownership, as entries in this distributed public ledger cannot be easily tampered with. In the past year, several startups have taken advantage of this feature to make it easier for clients to buy or sell gold and other precious metals.
“The Company does not fall under the e-currencies or e-precious metals trading exemption from money transmission because, when the Company issues a freely transferable digital certificate of ownership to buyers, it is allowing the unrestricted transfer of value